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If you want to know how Asian markets will do in 2013, look no further than the sliding yen, down more than 10% in seven weeks. With Shinzo Abe's Liberal Democratic Party back in power, expect more monetary easing until Japan can reflate its way out of its economic predicament, and an exchange rate of anywhere from 86 to 100 yen to the dollar over the next year.

The low yen would affect Japanese foreign direct investments in Asia and could produce a more robust Japanese economy that will take in more Asian components and goods. Indeed, "a weak yen changes everything in Asia," says Michael Spencer, regional economist for Deutsche Bank in Hong Kong. "While it may be good for Japan, at some point a very weak yen could also be a problem for Asian equities." A slip-sliding yen has already sparked a rally for Japanese equities. On Dec.28, the Nikkei closed up 0.7% to 10,395, a 23% rise this year.

THE YEN ASIDE, "the key for Asian markets in 2013 will be whether we finally see a rebound in earnings momentum," says David Gaud, senior portfolio manager of Edmond de Rothschild Asset Management in Hong Kong. "We need to see earnings surprises in 2013, which result in earnings upgrades forcing a rerating of markets, which will bring in more global investors to Asia." Over the next year, he says, because there won't be as much revenue growth, Asian companies will need to be efficient operations, restructure their costs, and improve margins.

Deutsche Bank's Spencer argues that high-beta economies in northeast Asia—Japan, China, Korea, Taiwan, and Hong Kong—will do better in 2013 than the low-beta economies of Southeast Asia that have been fairly resilient over the past two years. The exception: extremely open and trade-dependent Singapore, which is likely to mirror the outperformance of its look-alike Hong Kong.

China offers some of the best pickings in Asia now, says Gaud. "Investors are treating China as a large cyclical market, and as such there is a very strong valuation case that can now be made for Chinese equities," he says. "If you believe that margins will stabilize and eventually improve, and that the global cycle will turn once the fiscal cliff is resolved, China is probably your best bet in Asia." Gaud likes the beaten-down Shanghai market most, but says Hong Kong will most likely move upward in tandem with Shanghai.

Gaud also likes the Philippines as a turnaround story, as well as Thailand. But he's wary of markets like Malaysia, which did fairly well in anticipation of what is likely to be a tight election in March. Another market he's a little cautious about: Indonesia, whose rally is getting long in the tooth.